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The Role of Lender behavior in International Project Finance

Sumru Altug, Murat Usman () and Sule Ozler ()
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Sule Ozler: University of California, Los Angeles

Economics Bulletin, 2001, vol. 28, issue 2, A0

Abstract: A sovereign borrower seeks to raise funds internationally to finance a fixed-size project, which no single lender can finance alone. Lenders cannot lend more than their endowments, which are private information. A coordination failure arises therefore, some socially desirable projects may not be financed, even if ex post feasible. There are multiple equilibria, and a conflict exists between lenders about which equilibrium to coordinate on. When endowments are volatile, some lenders prefer an equilibrium in which the project is financed with probability p

JEL-codes: F2 F4 (search for similar items in EconPapers)
Date: 2001-01-29
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